Looking for a Lender? Start here
If you are thinking about buying a new home or refinancing, you are probably wondering which mortgage lenders offer the best options.
Thanks to the recently published U.S. study on satisfaction with primary mortgage origination by J.D. Power 2020 you have a strong starting point for your search.
With a mix of tech-first lenders and top-rated big banks, there are several options to choose from.
But don't limit your search. Just because a mortgage company gets good reviews doesn't mean it is the best company for you.
You still need to compare prices and fees from at least 3-5 lenders to make sure you get the best deal alongside great customer service.
Get Matched with a Lender (November 18, 2020)
The top rated mortgage lender for 2020 is …
At the top of J.D. Power stand some of the mega-lenders in the country:
Rocket mortgage Bank of America (tied for the second)chase (tied for the second)CitiUS bankLoan deposit
Quicken Loans' Rocket Mortgage earned top rating from J.D. for the eleventh consecutive year. Power.
Rocket and its parent company Quicken are getting high marks from borrowers for their quick and easy online application and customizable loan features.
In addition to being a premier FHA and VA loan lender, Rocket Mortgage can make a pre-approval decision within eight minutes.
However, the Rocket and Quicken track record doesn't mean this is the best mortgage lender for everyone.
In order to find the right mortgage lender for you, you need to do some homework.
First of all, determine what type of loan you will need. Then compare the rates and fees of several different lenders that appear promising.
You will be surprised which one can offer you the best deal.
Compare top refinancing lenders
Don't miss out on the best mortgage lenders for veterans and service members
J.D. Power mainly includes lenders who work with a wide range of consumers.
However, if you look at the fine print, you can see that military service members and veterans have additional options.
In fact, the top military lenders consistently rank even higher than Quicken Loans in terms of customer satisfaction. They just don't appear at the top of the list as they aren't available to most borrowers.
The best military and veteran mortgage lenders this year are:
USAAVeterans UnitedNavy Federal Credit Union
These lenders specialize in VA loans that offer zero down payment and often have below-market interest rates for eligible service members.
Finding a veteran-focused lender can also be a good idea if you have rocky credit or higher debt and want to work with a lender who can offer additional advice or assistance to qualify for a mortgage.
Many (though not all) military lenders have dedicated programs to help VA-eligible borrowers become homeowners.
If you are planning on applying for a VA loan, you can compare the best VA lenders and request quotes from several to see who offers the most competitive rates and terms.
Get Matched with a VA Lender (Nov 18, 2020)
How to Choose a Mortgage Lender
When thinking about how to find a mortgage lender, ratings can be a good place to start. With millions of other homeowners singing the praises of a lender, it's probably worth taking a look.
But rankings are just that – a starting point.
The right lender for you may not be one of the national banks or even be on a best-of list.
You may be better off looking at local banks or credit unions that are active throughout the loan process or that will work with you to qualify for a mortgage.
This is especially true if you think you will be having trouble qualifying for a home loan – possibly because you have lower credit, high debt, or non-traditional income.
Either way, it is important to find a lender who knows how to work with borrowers like you and can offer low interest rates for your situation.
Think about your individual needs
There are a number of factors that will affect whether a lender will approve you for a loan.
Sometimes a smaller company has more bandwidth to help borrowers with low credit scores or limited credit histories.
Lenders can also specialize in a certain type of loan or work primarily with a certain type of borrower.
Some have been known to take out jumbo mortgages in excess of the government guaranteed loan amount. Others work with bad credit or self-employed borrowers who may find it difficult to qualify for a mainstream loan. Still others do a large number of FHA, VA, or USDA loans and can offer expertise in these areas. Get matched with a mortgage lender (November 18, 2020)
What is your borrower profile?
Knowing what your profile as a borrower looks like can help you choose the right lender for your circumstances.
Here are some of the most important factors mortgage lenders consider:
Credit score: The higher your score, the more home loan options you have. However, some loan programs accept credit scores in the 500s and low 600s, and your score is only part of the evaluation processDebt: Lenders calculate all of your other debts plus your potential mortgage payment based on your monthly income (this is called the debt to income ratio) to determine how much you can affordIncome: Your income can also have an impact on the types of loan programs you qualify for. For example, USDA loans cap income 15% above the local median. Income can also determine whether you qualify for Advance payment assistance Programs, and not all lenders, allow borrowers to use these for their loansDeposit: If you can save 20% or more, then you can avoid paying for private mortgage insurance (PMI). But many lenders offer loans at only 3% less. FHA loans only require 3.5%, and VA and USDA loans allow 0% less
Before soliciting quotes from lenders, make a brief list of the mortgage lenders that appear to be a good fit for you. Then check to see if they offer the type of loan that you are looking for.
Many lenders will list the loan products they offer on their websites and some will highlight specific programs for first time borrowers or low credit applicants.
If you are still not sure which lenders are the best, you can ask your real estate agent for recommendations.
You can also use a mortgage broker. A broker identifies loans that suit your circumstance as well as lenders who offer these products.
Check Your Mortgage Eligibility (November 18, 2020)
How to Compare Mortgage Rates and Fees
It is a good idea to get mortgage quotes from multiple lenders so you can compare them side by side.
While interest rates will play a role in your decision, there are a number of other factors to consider, including:
Closing costs: How much can you expect fees, appraisals, origination costs and other costs? Loan Products: Do they offer mortgage options that suit your needs and that you can afford as a down payment? Maintenance: When the loan is closed, does the lender take care of the account management and payments – or sell it to another company? Special programs: Does the lender allow down payment assistance or offer loans to help first time home buyers? Application process: Is the application process 100% online or do you work with a loan officer from approval to close?
Once you get a feel for how different mortgage lenders interact with borrowers and what terms and products they offer, it will be easier to identify the lender that best suits your needs.
A look back at the 2020 mortgage market
Due to historically low interest rates, home sales soared to a 14-year high this year, and refinances rose 200%.
Many homeowners and buyers rushed to keep interest rates 3% or less, which turned out to be wise as interest rates rose after President-elect Joe Biden's victory.
However, the Federal Reserve has announced that interest rates will stay low through 2023. So you can still get a cheap interest rate if you haven't bought or refinanced anything yet.
Low interest rates created problems in the mortgage process
Despite skyrocketing sales, the mortgage industry had a fair share of emissions in 2020.
J.D. Power reported that the surge in mortgage demand resulted in longer loan processing times and problems with self-service application options.
The organization also found that lenders were struggling to cope with the influx of applications and that recent requests from borrowers were on the rise, especially with so many employees being forced to work from home.
What to Expect from Mortgage Lenders in 2021
According to J.D. Power, lenders will likely try to correct course by 2021 to stay competitive.
If you have concerns about having issues with online application programs, or if you are hoping to get your loan application processed quickly, reach out to the lenders you are considering and ask about their loan processing times for loan decisions.
You can also ask about the average time it takes to get a loan, as well as the customer service options for the online tools.
Getting an idea of how they are dealing with potential problems can help you feel more confident about choosing a lender.
Check your new plan (November 18, 2020)